U.S. Warms to Clean Energy

A review of monthly figures for new installations of electric power capacity in July shows that renewable energy is quickly becoming the energy source of choice in the U.S.

New data from the Federal Energy Regulatory Commission (FERC) shows that 100 percent of new capacity installed in July came from renewable energy. For the month, there were 21 megawatts of new solar, 379 megawatts of wind, and 5 megawatts of new hydropower. Natural gas still accounted for more than half of new capacity for the first half of this year, but renewable energy is quickly catching up.

The data is confirmation that the wind industry has rebounded after its downturn in 2013. Only 1,087 megawatts were installed last year, a mere 8 percent of 2012’s total. The industry blames the lackluster number on the fact that theproduction tax credit (PTC) expired, which provided a 2.3-cent per kilowatt-hour subsidy.

Despite the slowdown, costs continue to decline. Power purchasing agreements (PPAs) have reached an all-time low. According to a Department of Energy study, wind PPAs sold for only $25 per megawatt hour in 2013 for utility-scale projects in the interior part of the country. PPA prices are higher in other regions, such as the west and northeast, but prices are declining just about everywhere.

That’s mostly due to the production tax credit, and since it has now expired, the future of wind is uncertain. On the other hand, the DOE report notes that wind power is becoming more and more competitive. The average wind PPA in interior states is now at the lower end of wholesale electricity prices. In other words, wind is one of the cheapest forms of energy in some parts of the country.

And there are “thousands of megawatts” on hold that could now move forward since the IRS tweaked a tax incentive in early August to make it easier for wind developers to qualify for federal tax credits.

There is also good news in solar. There has been no shortage of innovations and breakthroughs to make it more cost competitive and more useful in a variety of applications. For example, on August 19, a team of researchers at Michigan State University announced that they had created a transparent solar cell. The “transparent luminescent solar concentrator” can be placed on windows or on tablet computers and cellphones, allowing for power generation while appearing see-through to the naked eye, according to the researchers.

This idea has been tried before, but the researchers claim prior iterations achieved poor results compared to this latest one. “Ultimately, we want to make solar harvesting surfaces that you do not even know are there,” Richard Lunt, one of the MSU researchers said.

Technological innovations will help solar capture greater market share, but bringing down costs is of paramount importance. And here there is good news, as well.

Solar technology and manufacturing processes have improved to such a degree that solar is becoming increasingly affordable. Costs declined by more than 60 percent from 2011 to 2013. And within the next three years, rooftop solar may become competitive with conventional electricity from the grid in more than half of U.S. states – even before taking into account federal, state or local incentives.

Further cost declines will likely come from financial innovation. Creative financing, such as the zero upfront cost lease-model being pioneered by installers like SolarCity, is allowing the solar industry to tap into a vast new pool of demand.

Global solar demand is expected to surge 29 percent this year, to a record 52 gigawatts. Installations could jump to 61 gigawatts next year. The rapid growth could lead to a global shortage in solar supply for the first time in almost a decade.

The pace is gradual and piecemeal, but renewable energy is clearly becoming mainstream.